To develop a low carbon economy we must focus on long-term objectives

An interview with a world-leading energy expert persuades me of the need to focus on long-term objectives when it comes to energy policy.

“We do not have a shortage of energy; it is a question of harnessing that energy to our needs. If you use sun or if you use wind, it is expensive, but we can do it.”

This sentence illustrates an important point that often gets lost amidst the whirlpool of false facts, statements and counter statements that characterises the energy debate. We have the technology to develop a low carbon economy - the only barriers to doing so are political and economic.

Before you accuse me of blind optimism, this point came from Janusz Bialek, DONG Professor of Renewable Energy at Durham University. As the author of some 140 research papers and an adviser to the UK Government and European Commission, this optimism comes right from the top of the scientific elite.

The political and economic barriers to a green future are always characterised by short-term thinking. Indeed, we have a political system in which the party in government frequently appears unable to plan beyond the next election. Examples of such limited foresight in energy policy are numerous - just look at the solutions suggested by the Conservatives and Labour to the recent rise in energy bills.

David Cameron’s proposed remedy is to “roll back” green taxes; a policy that is representative of the worse kind of recklessness. We know he no longer cares about the environment – his green credibility is melting as fast as the Norwegian glaciers where he performed his ‘hug a husky’ stunt – but the extent to which he even seems to be ignoring carbon cutting targets that are enshrined in law is mind-boggling.

But let me strip away the emotion for a moment in favour of cold, hard facts. Of the £1,267 that the average household pays for gas and electricity each year, just £53 (9% of the total) goes towards subsidising low carbon energy development. The overall figure of £112 quoted by a number of media outlets includes money given to the poorest households to heat their homes, and is therefore an inaccurate representation of the price of green subsidies.

“If you look at electricity bills, about 50% of the bill is due to the wholesale price of energy,” says Professor Bialek. “The so-called ‘marginal’ fuel for electricity (which is the fuel that determines energy prices) is gas. So if the gas price goes up, as it is at the moment, then the final electricity price has to go up.”

In other words, the rising wholesale price of gas is the key issue, a factor that politicians would find hard – if not impossible – to manipulate. Blaming green levies, as David Cameron is currently doing, is representative of a failure of leadership. The long-term objective of developing a low-carbon economy cannot be substituted for the sake of a few digits on a bill sheet.

Yet the same short-termism is also at work in Ed Miliband’s promise to freeze energy bills if Labour win the next election. As I have already mentioned, retail prices are completely dependent on wholesale prices, and these are determined by world markets which UK politicians are unable to influence. Any savings that consumers might make during a freeze would effectively be fool’s gold, as the huge losses incurred by energy companies if they are unable to offset rising wholesale prices with profits from retail operations would deter vital investment.

The energy equation - lighting up the Dark Continent

Bringing energy to Africa depends on solving a vital equation.

www.visibleearth.nasa.gov

Africa is on the up, with the International Monetary Fund forecasting growth of 6.1% next year compared to a global average of 4%.

However, chronic energy shortages mean that Africa is still very much the ‘Dark Continent’, with satellite maps showing a land in shadow next to the burning lights of Europe.

According to a report by the World Bank, the lack of reliable electricity represents a key barrier to development:

“School children often cannot read after dusk, businesses cannot grow, clinics cannot refrigerate medicine or vaccines, and industries are idled hampering economic growth, jobs, and livelihoods.”

So it is clear that Africa needs more energy, but the key challenge will be to achieve this increase in a way that does not heighten emissions from a continent acutely vulnerable to the effects of climate change.

This is where the energy equation comes in, with the future of African prosperity dependent on meeting this formula:

Increased energy supply (x) + no rise in emissions (y) = sustainable prosperity (z)

Clearly, the difficulty comes when we consider what is currently seen as the best way to achieve x – increased fossil fuel extraction. Indeed, the resource potential of Africa is widely recognised, with Nigeria set to become the third largest supplier of natural gas in the coming years.

"If and when people get their heads together to solve the problem, they will solve the problem." An interview with a world-leading energy expert.

I talk to Janusz Bialek, DONG Professor of Renewable Energy at Durham University. 

An expert's view of the issues facing the energy industry

“Necessity is the mother of invention”. Professor Bialek’s phrase neatly sums up the most important feature of the energy debate in Britain and across the world. We need energy for our civilisation to function, but we also need to reduce carbon dioxide emissions if our civilisation is to continue to exist. The attempt to reconcile the need for energy with that of protecting the environment underlies all of Janusz’s work.

Alongside being a world-leading expert who has produced some 140 research papers, Janusz has advised the UK government and European Commission on energy infrastructure. An interview in the New Statesman in 2011 confirmed his prominence in the national energy debate, and he is widely sought after by the media.

We start on the issue of rising energy bills, which is especially timely as a number of companies have just announced significant increases in customer levies. The rising cost of energy has been criticised as yet another example of corporate greed by some commentators, but Janusz is keen to stress the importance of other factors.

     “What the generators do is obviously to increase prices now in order to ride through any price             freeze if it comes”.

“If you look at electricity bills, about 50% of the bill is due to the wholesale price of energy. The so-called ‘marginal’ fuel for electricity (which is the fuel that determines energy prices) is gas. So if the gas price goes up, as it is at the moment, then the final electricity price has to go up.”

He explains that rising gas prices are due in part to the increasing demand for the fuel as countries such as Japan and Germany abandon nuclear power after the Fukishima disaster. The glut of shale gas from fracking has also caused a huge amount of coal to flood the European market from the USA, as it is no longer needed for electricity generation. This means that gas plants in Britain are running at a loss, because it costs generators more to buy the gas than they get from selling it. Energy companies therefore rise prices for consumers to correct this shortfall. I ask if Labour’s proposed energy bill freeze if they win the election in 2015 could be a solution to the growing pressure on households.

Return of King Coal reveals the lack of ambition behind UK energy policy

Coal-fired power stations are set to stay in Britain until well into the 2020s, as the dismal failure to increase renewable electricity generation to necessary levels comes to light.

Green-minded consumers will now be required to provide hundreds of millions of pounds’ worth of subsidies to Britain’s coal power stations, which senior ministers say are necessary to avoid future electricity blackouts.

There could be no better evidence for the total lack of ambition behind the government’s policy towards renewables. The figures speak for themselves: Britain produced just 6.5% of its electricity from renewable sources in 2010, placing it third from bottom in the EU.

Percentage of electricity generated from renewables in EU countries:

Meanwhile, political will is driving a transition to renewable energy all over Europe. Denmark has a thriving green energy industry, with 28,000 workers employed in the production of wind turbines. This has radically transformed the Danish economy, and the country is on track to run entirely on renewables by 2050 .

Germany  is another success story, with 22% of electricity supply made up of green energy. Locally-owned energy cooperatives account for half of this total, while in the UK the corresponding figure is just ten percent.